U.S. futures steady, Net stocks focus

Dollar higher amid outlook for "hawkish" Fed on Tuesday

By

EmilyChurch

LONDON (MarketWatch) - U.S. stock futures were steady on Monday with the dollar notching gains and Internet stock valuations in focus after IAC/Interactive said it would buy search engine Ask Jeeves for $1.9 billion.

Ask Jeeves
ASKJ
was last up 16 percent at $28.05 in the speculative pre-open trade, after rising close to $30. Barry Diller's IAC/InterActiveCorp
IACI
was down 3.5 percent at $21.50.

The deal sent shares of related Net stocks, including Mama
MAMA
and Yahoo
YHO
higher.

Scattered merger deals and talk emerged elsewhere.

Medicis
MRX
said it has an agreement to buy Inamed Corp.
IMDC
in a stock and cash-based deal that values Inamed at $2.8 billion

Semiconductor equipment supplier Entegris, Inc.
ENTG, +1.29%
said it has an agreement to buy Mykrolis Corp.
MYK
for $1.3 billion in stock.

Media technology group Avid Technology, Inc.
AVID, -1.24%
said it has an agreement to buy Pinnacle Systems, Inc.
PCLE
in a cash and stock deal valued at $462 million.

Sungard Data Systems
SDS, +0.24%,
producer of financial-services software and solutions, is in talks on a leveraged buyout, valued at as much as $10 billion, with a group led by Silver Lake Partners, the New York Post reported, citing sources familiar with the situation. Shares were up 16 percent to $29 on Instinet.

French telecommunications equipment manufacturer Alcatel
ALA, -0.14%
and defense contractor Thales (012132) are in talks about a possible alliance, French newspaper Les Echos reported over the weekend, without naming its source. Alcatel declined to comment.

Hit Entertainment (HTE), the British company behind popular cartoon character Bob the Builder, announced a $190 million cash offer from private equity firm Apax Partners.

Looking at the markets, the Dow industrials futures were up 3 points at 10,636 ahead of 7 a.m. Eastern. The dollar was holding higher against its main rivals as currency and debt markets position ahead of the Tuesday Federal Reserve meeting. Markets have priced in a quarter percentage point hike, but expectations have been building that the Fed may strike a "hawkish" tone.

Focus stocks

In pharmaceuticals, Schering
SHR, +0.00%
dropped 13.8 percent in Frankfurt and Novartis
NVS, -2.79%
eased 2.3 percent in Switzerland after saying an analysis of progression-free survival with the investigational drug PTK/ZK did not achieve statistical significance. See story

Defense contractor L-3 Communications Holdings
LLL, -0.41%
is facing a federal probe after one of its units supplied defective parts used in emergency radios, the Journal reported, citing company and government officials. James Dunn from the unit, Interstate Electronics Corp., told the Journal that L-3 "is not construed as a bad vendor" by the Pentagon or by Boeing. "We haven't seen any evidence of criminal wrongdoing."

Shares of Swedish-Swiss group ABB
ABB, +0.64%
rose over 5 percent after it said it will contribute an additional $232 million into a trust fund as part of an agreement to resolve the asbestos claims from Combustion Engineering and ABB Lummus Global. Ahead of the agreement, ABB had earmarked $1.3 billion the asbestos issue, an official confirmed.

Broker calls

Merrill Lynch raised its rating on eletronics retailer RadioShack Corp.
RSH, +2.90%
to "neutral" from "sell", citing valuation. "Our upgrade does not reflect increased optimism about the fundamentals," the broker said. "RadioShack's dependence on wireless in the face of less favorable industry dynamics, heightened competition in the profitable accessories business, and very slow progress in other categories continue to concern us. But at this point, the consensus view is beginning to reflect these concerns."

UBS overnight upgraded its rating on the Chicago Mercantile Exchange
CME, +0.20%
to "neutral" from "reduce" and lifted its first quarter earnings per share estimate to $1.98 from $1.93, ahead of the consensus at $1.92 a share from the analysts. "Given robust first quarter 2005 volume... concurrent open interest growth, product/market opportunities, cash, and rising estimates, we're upping our mid-term growth estimate (and) price target to $207," the broker said.

Deutsche Bank Monday raised its recommendation on French media company Vivendi Universal
V, -0.40%
to "buy" from "hold", after saying "fiscal year results indicate this is a management team we think the market should back." The bank also said it believes current pessimism over the outlook for the company's dividend/cash returns is excessive

Company

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